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Accountants for Start-up Businesses

Accountants for Start-up Businesses discussed by Hayvenhursts Chartered Accountants

Starting a new business is exciting but can also be a bit scary as well, no matter how big or small your start-up business will be. There are some vital things you should think about and plan when starting a new business and we talk about them in our step by step “Accountants for Start-up Businesses” article.

Business Planning

When you are thinking about or planning on starting a business it’s vitally important you have a strong and clear business plan. A business plan isn’t something that is set in stone, it is a starting plan for your business that should change and evolve as your business grows and changes. You can be an expert in business planning, however, no one can predict exactly how a business will start and change in the first couple of years and therefore, it is important that you review it regularly with your accountant, adapt and change it as you need to.

A flexible business plan will enable you to assess what is happening in your business and think creatively to come up with new solutions for any challenges, some of which can be because of faster growth than you planned, as well as not achieving what you first set out to do.

Whether you’re starting a new business or expanding an existing one, a business plan will help to guide your decisions. It provides the detail and clarity in all aspects of your business including; clarifying your business idea, spotting potential problems, setting out your vision and goals and is a structured way to measure your progress. It should include; marketing, operations, products, services as well as your finances.

If you need a bank loan, credit or any type of financing for your business then you will need a detailed business plan which shows every aspect of your business and your plans for it in the short and long term. A business plan should include:

An Executive Summary

This is a detailed overview of the business you are starting. It needs to be a concise summary which includes the points which are detailed in each section of your business plan. An executive summary should give a good understanding of your business without the need to read the detail in each section. It should include a summary of each section of your business plan, much like an index.

  • Business Summary
  • Business Vision
  • Business Aims
  • Financial Summary
  • Business Name
  • A short description/summary of your business, product and company

Business Background

  • Why you want to own your own business
  • Previous work and personal experience (if relevant)
  • Qualifications and education
  • Training
  • Details of any future training courses you want to complete which will aid your business
  • Hobbies and interests

Products & Services                                                                                                            

  • What you are going to sell (product, service or both)
  • The basic product/service you are going to sell
  • The different types of product/service you are going to sell
  • If you are not going to sell all your products/services at the start of your business, explain why not and when you will start

The Market

  • Are your customers (individuals, businesses or both)
  • Describe your typical customer
  • Where your customers are based
  • Why your customers will buy your product/service
  • Factors which help your customers choose which business they buy from
  • Any products/services you have already sold providing details
  • Customers waiting to buy your product/service providing details

Market Research

  • Key findings from market research internet searches
  • Key findings from market research customer questionnaires/research
  • Key findings from market research field research along with any test trading

Marketing Strategy Plan

  • What marketing you plan to do, when and which media type
  • Why you have chosen this marketing method
  • Cost of marketing
  • Customer sales from each marketing media
  • Estimated cost per sale from each marketing media

Competitor Analysis

  • Name, location and size of competitor business
  • Products and services, they offer
  • Cost of their services
  • Strengths, Weaknesses, Opportunities, Threats (SWOT Analysis) of each business and their services
  • Unique selling point (USB) of each business and their services

Business Overview

  • Legal structure
  • Business formation history
  • Type of business
  • Location of business
  • Means of doing business (internet, website, customer-facing operation, mail)

Operations & Logistics

  • Production facilities
  • Delivery methods
  • Payment methods & terms of business
  • Suppliers
  • Premises
  • Equipment & Costs (systems & IT)
  • Management Information (MI)
  • Transport
  • Legal requirements
  • Insurance requirements
  • Management and team structure

Cost & Pricing

  • Product/Service name
  • Number of units
  • Product/Service cost
  • Cost per unit
  • Profit & Loss margin £
  • Profit & Loss margin %
  • Mark up %

Financial Forecast

  • Monthly sales by product and service forecast
  • Monthly product/service revenue forecast
  • Monthly product/service cost forecast
  • Monthly product/service profit
  • Seasonal assumptions

Budget Spend

  • Details of monthly costs/spend & totals
  • Details of monthly income & totals
  • Monthly cash flow forecast

Back-up plan

  • Short term, plan
  • Long term plan 2nd, 3rd, 4th, 5th year plan
  • Back-up plan

When you first start compiling your business plan it can seem very daunting and a good and professional accountant will be able to help you, as well as reviewing it with you regularly to make sure you are on track and actions needed if not. They will have the business experience to analyse your business finances and offer advice and guidance for all scenarios. Always remember that if you fail to plan, you will plan to fail. Often, when a new business starts up you are extremely busy and you will focus on operational aspects and this can take your focus away from the crucial financial results, therefore, having a good accountant who will review your business plan with you regularly is vital right from the start.

Raising Finance as a Start-up

Some new start-up businesses need to raise finance when they first startup, to either generate business, buy stock and, or equipment. A detailed and thorough business plan can help you secure a business loan for a new business and is something that your bank will review with you thoroughly before they agree on any financing.

Startup business accountant Cardiff

Registered Office Address

registered office address is the official address of a company, association or any other legal entity. A registered address forms part of the public record and is required in the UK. A registered address enables your customers and suppliers to identify who they are doing business with. Having a registered company name, address and number makes limited companies searchable on the Companies House database, allowing them to find out information about your business.

Sole traders don’t need to register with Companies House, however, they must register with HMRC and complete an annual self-assessment tax return. If you are starting a limited company or limited liability partnership (LLP) then you are legally required to register with Companies House.

Your accountant will help you with this so you understand what you need to do and the type of company you should first register as.

As a new or existing business, you can use your home address as your registered office for your limited company in the UK. Companies House place all registered office details on public record so always be aware that customers can find out where you live. The benefits of having a registered address which isn’t your home address is, it allows you to move premises as you grow, without changing your address with Companies House and it also looks more professional.  

You can change the registered address of a limited company directly with Companies House.

Strategic Planning

Strategic planning, setting goals and milestones for your new business is essential as well as reviewing and amending them regularly with your accountant. It will keep your operation and finances in check so actions and changes can be made quickly if needed.

Business Growth

Business growth goals are vital to show in your business plan. They should be stretching but realistic at the same time. If you set yourself an unrealistic target then this can be demoralising and make you feel you aren’t achieving what you should or planned to do, however, setting growth plans that aren’t stretching can make you sit back and not focus on new ideas, products and services so there is a fine balance. A lot of new businesses won’t see a huge profit in their first year of trading, especially if they have a lot of costs to outlay when they first startup and if they do then this will normally show as a loss in your first financial year records. A good accountant will help you with your business planning and growth targets and will always give you a realistic view of what is happening in your regular reviews with them.

Start-up Company Formation

At your business planning stages your accountant will look at the targets you have set in the first year and will advise you about your business formation and whether you should start as a limited company and what is right for you. When your accountant analyses your finances in your regular reviews your company formation and type may and can change if it needs to. This often happens when you have established yourself and your sales, revenue and profit are looking positive.

A limited company is an organisation that you set up to run your business and it means that each shareholder’s responsibility for financial liability is limited by the value of the shares that they own but have not paid for. Company directors of limited companies are not personally responsible for business debts if anything happens to a business.

Advantages of a Limited Company

  • You are likely to pay less personal tax than a sole trader, however, limited company profits are subject to UK Corporation Tax, which is currently set at 19%
  • If you are a director of, and a shareholder of a limited company you can choose to pay yourself a small salary and draw the rest of your income from dividends from the business
  • A limited company is a separate entity from its owners and this includes the company bank account, ownership of assets and the involvement in tenders and contracts which are separate from the personal interests of the company’s shareholders
  • A limited company gives you the reassurance of ‘limited liability’. If, no fraud has taken place, your ‘limited liability’ means you are not personally liable for any financial losses made by your business which gives you added protection as a new business
  • A limited company can provide a more professional image in some cases and industries
  • When you register your limited company with Companies House your company name is protected by law and this means no other business can use the same name or anything similar. As a sole trader, it is possible that someone else could trade under the same name as you
  • A limited company can issue shares which means you can easily sell stakes in the company, and, or transfer ownership of shares if you need, or want to
  • Many people often prefer to operate as a sole trader business as it is thought that the start-up costs are lower, however, your accountant can help you with what you need to do to set up a limited company, or it is now relatively easy to register yourself with Companies House online
  • A limited company can fund its employees’ executive pensions as a business expense and this means that pension contributions can be made before tax deduction which is a huge benefit to employees
  • If a shareholder of a limited company wants to retire, sell their shareholding, or passes away it is easier to transfer ownership of a limited company

Registering a Limited Company

Companies House is the regulatory body for the registration of all limited companies in the UK, and maintains the registry of companies.

Before you can start trading as a new limited company it needs to be registered with Companies House. Registering a new company with Companies House is relatively easy online now so you can either do this yourself or ask your accountant to do it for you.

VAT Registration

A common question with small business owners and new businesses is whether they should be VAT registered. Your accountant will help you with this by reviewing your business start-up plan and regularly as it grows. You must register your business for VAT with HM Revenue and Customs (HMRC) if its VAT taxable turnover is more than £85,000 and there are certain rules and regulations that you must follow, again your accountant will be able to advise you on these.

Most VAT registered businesses that earn over £85,000 must also follow the rules for Making Tax Digital which can be found on the GOV.UK website.

Management Information

Management information about your business sales, revenue, costs and profit are essential for you to make crucial decisions in the early days of a start-up business as well as existing businesses so you should always plan for this when you first start. Your accountant will be able to help you with this, the information you need and the systems that will allow you to record the data you need.

About Hayvenhursts Chartered Accountants Cardiff, South Wales

Whether you are a new ‘start-up’ business looking for an accountant for the first time, or an established business looking for more from your accountant, we believe we can provide you with the best accountancy services in South Wales. We believe in developing an understanding of your start-up or existing business, its needs and goals so we can offer you the personal services of a local accountant who has the infrastructure, knowledge and expertise in a large national accountancy practice.

Choosing an accountant is an important decision when you are first starting a business or if you are an existing business which has been in operation for many years. You should always find one that matches yours and your businesses needs and one that you trust and feel comfortable with.

Hayvenhursts accountants will give you advice and trustworthy information about your business’ financial records and statuses. We can be involved in financial reporting, taxation, auditing, forensic accounting, corporate finance, business recovery and insolvency. We can support you with accounting systems and processes and will work alongside you to drive your business forward, bringing our skills of strategic forecasting along with expertise in finance, accountancy, auditing and taxation which is essential to every business in today’s climate, whether new or existing. 

Our services are available whenever you need them and you can call us whenever you need help and advice without being charged every time.

Our range of services is extensive and will help you establish your business plan and everything else that goes with starting up a new business. We will spend time with you to learn and understand your business and adapt our services to suit you. Our services include:

  • Accounts Preparation
  • Audits
  • Bank Accounts
  • Book-keeping
  • Book-keeping Health Check
  • Business Growth
  • Business Health Check
  • Business Plans
  • Business Valuations
  • Commercial Property
  • Company Formation
  • Company Secretarial
  • Contractors and IR35
  • Inheritance Tax Planning
  • Management Accounts & Information
  • Management Systems
  • PAYE Health check
  • Payroll & PAYE Returns
  • Personal Tax
  • Property Tax
  • Raising Finance
  • Reduce your SRA Audit Costs
  • Registered Office
  • Strategic Planning
  • Tax Disputes
  • Tax Enquiries & investigations
  • Tax Planning
  • Tax Returns & Self-Assessment
  • Trusts
  • VAT Health check
  • VAT Planning & Disputes
  • VAT Registration
  • VAT Returns

Contact us today on 02920 777 756 and we will answer any questions you may have or we will arrange for one of our expert and knowledgeable accountants to call you or come out and see you at a time convenient to you.

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